Since the ministry has asked banks to lower down the share of bulk deposits, banks are planning to reduce rates on bulk deposits with the banks. Banks have been asked to limit the share of such bulk deposits to 15 per cent of total fixed deposits which is as much as 40 per cent for some banks in current fiscal.
The step is taken in regards to manage asset-liability ratio effectively and improve profitability of banks.
S.L.Bansal, Chairman and MD, Oriental Bank of Commerce said, “Fortunately there is not too much of a credit demand. So unless a bank is very crazy about growing its balance sheet, then it will refrain from raising such deposits. Rates on bulk deposits will automatically come down.”
Banks will ask for extended time period from Union Government to achieve the target in next fiscal as it seems difficult to lower the deposits drastically in this fiscal.
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